What does the "Hercules" plan bring for the red loans
All the data about the fate of thousands of borrowers who are having difficulty repaying their loans are changing. The “Iraklis” plan passed by the Parliament (Law 4649 / 16-12-19) enables the banks to convert the red loans into bonds which will be sold in foreign investment funds. In fact, the State will provide its guarantee to a large part of them amounting to 12 billion euros.
But what does the above “Hercules” plan mean for thousands of borrowers?
Practically, it means that the total of the red loans, whether they are housing – consumer or business, about 70 billion, will be sold to funds. To date, more than half of the loans have been sold and the rest are expected to be sold under the “Hercules” plan. These loans will no longer be managed by banks, but by independent claims management companies. The “receivables managers” that are companies specialized for this project, will act as trustees of the funds, will have a specific schedule and goals to collect the maximum possible amount of receivables either by arranging loans or by compulsory measures for the sale of mortgages. real estate.
The positive for the borrowers is the low acquisition price of these loans from the funds which in no case will exceed the net book value of the receivables, remaining in the amount of the provisions that have been made and therefore there will be the possibility of greater flexibility and possible ” of the debt in order to agree on a viable arrangement. That is, the “receivables managers” will do what the Banks have not done so far, they will leave room for favorable arrangements according to the possibilities of the borrower.
The downside for borrowers is that the period of inactivity and the freezing of auctions is coming to an end. In the absence of a debt settlement agreement in a context that takes into account the borrower’s income or the cash flows of the business, in the case of a business loan, combined with the value of their real estate, the “receivables” will proceed quickly to foreclosures and auctions of real estate. According to forecasts, a wide wave of auctions is expected in the next 2-3 years that will create social and economic tensions as happened in Spain a few years ago, due to mass evictions.